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How a strategic borrowing plan helps a gallery owner sponsor an artist's career-making exhibition, without having to sell his own investments.

Blake has always had a passion for art. Even while building a successful career in finance, he remained active in the art community. Finally, after 20 years as a corporate executive, he fulfilled a life-long dream and opened an art gallery of his own.


Following the opening of the gallery, Blake chose BNY Mellon to manage his investments. A few years later, he also decided to include BNY Mellon for his private banking needs. Unable to leave the gallery to sign the banking documents in person,  Emma, a BNY Mellon private banker assigned to Blake's account, offered to hand-deliver them on her way home from work. It was a sweltering August afternoon, so Blake invited her to enjoy the cool of the gallery while he gave her a personal tour.


Appreciative of the concierge service BNY Mellon was providing, Blake spent several hours in long conversation with Emma about his background, the transition from executive to entrepreneur, and why he was so passionate about the art and artists he represented at the gallery.


Emma’s attention was especially drawn to one piece by an up-and-coming artist, who Blake explained had recently been invited to showcase her work at the Tate in London. Blake dearly wanted to sponsor the exhibition because it was the break the artist needed. But there was a problem: cashflow. It would take several million dollars to fund the expense of transporting the artist’s work to London.


The value of advice


Emma was quick to reply with a simple question: “Why not borrow the funds? I can help you with that.”


Blake was not unfamiliar with leverage, having taken out a line of credit for working capital when he first started the gallery. With the balance on that loan already at zero, the timing of his impromptu meeting with Emma couldn’t have been more perfect. The next morning Emma followed through with the advance of funds, enabling Blake to move forward with the sponsorship, without having to sell any of his investments.


While the borrowing strategy was straightforward and quickly administered, it was Emma’s genuine interest in Blake’s business and personal aspiration that turned a desire to help an artist into a reality. By borrowing during a period of historically low interest rates, Blake was able to benefit from:


  • Positive arbitrage between the return on his investment portfolio and the low cost of borrowing
  • Avoiding the sale of assets and incurring capital gains taxes in the process, and
  • The ability to protect and grow his long-term investments.


Whether clear-cut or complicated, strategic borrowing works best when integrated with a comprehensive Active Wealth strategy. Our expert advice and support for all five Active Wealth practices empowers clients to manage, protect and grow wealth over time.

Credit services, which are subject to application and credit approval, are provided by BNY Mellon, N.A., a wholly owned subsidiary of The Bank of New York Mellon Corporation. Member FDIC.


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